Donald Trump, the President of the United States, is regarded as such a 'tariff man' that he sees tariffs as a universal remedy. He believes that tariffs help restore the manufacturing capacity in the United States, subdue foreign nations, restore trade balance, repay the U.S. budget deficit, and reduce the tax burden on Americans.
Of course, effectively using tariffs can help make foreign goods more expensive, thereby increasing domestic production. The United States is not as dependent on trade as other countries, allowing it to use tariffs without falling into a recession while inflicting damage on other national economies. However, there are issues with Trump's tariffs being excessively high and unpredictable. Just on the 11th, Trump had announced that he would impose an additional 25% tariff on Canadian steel and aluminum, bringing the total to 50%, only to withdraw it half a day later. The 25% tariffs on Mexico and Canada have been postponed twice and are expected to take effect on April 2, but there are still many questions regarding the timing of implementation. In this situation, we revisit the effects that Trump seeks to achieve with tariffs.
The first reason is to eradicate fentanyl and illegal immigration. Trump has stated that the reason for imposing a 20% tariff on China and a 25% tariff on Mexico and Canada (which has been postponed twice) is to prevent fentanyl and illegal immigrants from entering the United States. Howard Rutnick, Minister of Commerce, has repeatedly mentioned that the tariff postponement measures expected to take effect on the 2nd of next month will remain until Trump determines that significant progress has been made by various countries in preventing fentanyl influx. Rutnick said on NBC on the 9th, "Once fentanyl is resolved, these (tariffs) will disappear," adding, "But if fentanyl is not resolved or Trump is not confident about it, this status will remain until he feels comfortable." Kevin Hassett, Chairperson of the National Economic Council, also appeared on ABC on the 9th, calling it "part of a war on drugs, not a trade war."
The second reason for imposing tariffs is the potential to increase revenue. In his congressional address on the 4th, Trump emphasized, "We will generate trillions of dollars and create jobs like never before," adding, "Tariffs will make America wealthy again and make America great again." Additionally, Trump told reporters on Air Force One on the 9th, "We will be so rich that we won’t know where to spend all that money."
The Federal Budget Committee estimates that Trump's tariffs on China, Mexico, and Canada could generate about $120 billion annually, totaling $1.3 trillion over 10 years. However, since Trump has defined tariffs as part of a war on drugs rather than a trade war, the revenue increase effect from tariffs could disappear if the fentanyl issue is resolved.
There is also the intention to increase manufacturing jobs through tariff imposition. Trump stated on the 9th, "Just watch. Jobs will be created, and factories will open. It's going to be great." To achieve this, Trump frequently mentioned lowering domestic taxes and increasing tariffs on products produced overseas. He also referred to this as one of the key selling points of tariffs in his joint address to Congress, emphasizing, "We want to lower taxes on domestic production and all manufacturing," and added, "Under the Trump administration, if you don't make products in America, you will have to pay tariffs, and in some cases, quite hefty tariffs."